Maja Seliga-Kret,  Mateusz Janiak

The article provides a discussion of the Supreme Administrative Court’s judgment of 19 January 2021 (case ref. II FSK 2644/18) where the court held that, under the laws in force until 2018, a downward related party profitability adjustment to the level arising from a benchmarking study could not be deducted for income tax purposes. The court’s reasoning, however, is questionable. What it ignores is the fact that, operating in business realities, entities are not able to predict all the circumstances that affect the prices charged during the year, despite exercising due care when setting them. The court also fails to see the obvious causal link between the transfer pricing adjustment and income.